CoreWeave Turns $50 Million Loan Into $12.5 Billion AI Jackpot For Billionaire Investor

Benzinga
2025.10.08 14:35
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Alec Litowitz's Magnetar Financial has transformed a $50 million loan into a $12.5 billion stake in CoreWeave Inc. (NASDAQ:CRWV), representing 72% of its portfolio and a 145% quarterly gain. Initially investing through structured loans secured by Nvidia GPUs, Magnetar's position grew significantly after CoreWeave's public offering. As of September 30, Magnetar held 91.4 million shares, achieving a 247% gain despite trimming its position. This venture-like investment in AI infrastructure is drawing attention on Wall Street, showcasing the importance of timing in finance.

Alec Litowitz's Magnetar Financial—once famous for shorting subprime debt—has quietly morphed into one of the biggest beneficiaries of the AI gold rush. The billionaire hedge fund manager's bet on CoreWeave Inc. (NASDAQ:CRWV) has ballooned from a modest $50 million loan into a $12.5 billion stake, representing nearly 72% of Magnetar's $20.5 billion portfolio and driving a 145% quarterly gain.

  • Track CRWV stock here.

The Illinois-based fund, which made its name with the infamous "Magnetar trade" during the 2008 financial crisis, is now playing kingmaker in the emerging world of AI infrastructure. Litowitz's team spotted the opportunity early, when CoreWeave was just an Ethereum (CRYPTO: ETH) miner hoarding Nvidia Corp (NASDAQ:NVDA) GPUs. Those same chips now power the data centers training the world's largest AI models.

Read Also: CoreWeave To Double Down, Captures Microsoft And Google’s AI Dollars

From Debt Deals To AI Dominance

Magnetar's initial move into CoreWeave came via structured loans—debt deals secured by the company's high-end Nvidia processors. By 2024, Magnetar was leading a $7.5 billion loan to CoreWeave and Blackstone, in one of the largest private debt financings ever. When CoreWeave went public in March, Magnetar's convertible notes turned into a massive equity windfall.

As of September 30, Magnetar held 91.4 million shares, or about 23% of CoreWeave, even after trimming its position by roughly 4.4 million shares. That partial sale still delivered a 247% gain, with CoreWeave stock up more than 220% year-to-date.

A Hedge Fund Going Venture

For a fund built on credit arbitrage and relative value, Magnetar's all-in bet on a single AI name is turning heads on Wall Street. Some investors are uneasy with the venture-like nature of the exposure. But for now, the returns are impossible to ignore.

Suppose the 2008 "Magnetar trade" was about profiting from a housing collapse. In that case, the 2025 version may be about powering the rise of artificial intelligence—and Alec Litowitz just proved that in finance, timing is still everything.

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